On Tuesday, August 22, 2017, the U.S. Court of Appeals for the
District of Columbia Circuit vacated and remanded an order by the
Federal Energy Regulatory Commission (“FERC”)
authorizing the construction and operation of the Southeast Market
Pipelines Project (the “Certificate Order”).1
Although the court rejected several of the claims raised by
environmental and landowner groups seeking judicial review of the
Certificate Order, a divided panel held that FERC’s
environmental review of the project failed to adequately consider
the downstream effects of greenhouse gas emissions resulting from
increased power generation. In reaching this conclusion, the
court distinguished this case from three 2016 D.C. Circuit
decisions upholding FERC’s National Environmental Policy Act
(“NEPA”) review of liquefied natural gas
(“LNG”) facilities2—finding that whereas FERC is not
the “legally relevant cause” and thus not required to
review the indirect effects of increased natural gas exports, FERC
is required to evaluate the indirect effects of increased
power generation served by an interstate natural gas pipeline, at
least when the pipeline has stated that power generation is one of
the primary purposes of the project. The D.C. Circuit vacated
the Certificate Order and directed FERC on remand to prepare an
Environmental Impact Statement (“EIS”) consistent with
the court’s decision. Judge Brown filed a partial
dissent, agreeing with the court’s decision in all aspects
except for its findings with respect to FERC’s review of
greenhouse gas emissions.

The Southeast Market Pipelines Project involves three separate
interstate natural gas pipelines currently being constructed in
Alabama, Georgia, and Florida. Although the pipelines have
different owners, the project’s overall aim is to serve the
growing natural gas demand of Florida’s power plants.
As the court’s decision points out, the two major natural gas
pipelines already serving the state are nearly at capacity, and
Florida utilities require the additional natural gas provided by
the project to generate enough power to meet electricity
demands. FERC treated the three pipelines as one project for
purposes of its review under the NEPA and Natural Gas Act
(“NGA”), preparing a single EIS and issuing the
Certificate Order for all three pipelines on February 2, 2016.

Two sets of challenges were filed against the project with the
D.C. Circuit: (1) Environmental groups Sierra Club, Flint
Riverkeeper, and Chattahoochee Riverkeeper (collectively,
“Sierra Club”) filed a petition for review in Case No.
16-1329, which the court granted in part; and (2) landowners filed
petitions in Case No. 16-1387, which the court denied.

Environmental Arguments

Both Sierra Club and the landowners raised several challenges to
FERC’s NEPA review. The court upheld FERC’s EIS
against each of these claims, except for the greenhouse gas
issue.

Environmental Justice Review

Sierra Club’s first challenge was that, for various
reasons, FERC’s review of the project’s effects on
low-income and minority populations (“environmental justice
communities”) was insufficient. As a preliminary
matter, the court explained, NEPA requires an agency to adequately
consider and publicly disclose the environmental impact of its
actions, but does not direct an agency to reach any particular
result. Accordingly, FERC was required to take the requisite
“hard look” at environmental justice issues but was
“not required to select the course of action that best serves
environmental justice.”3 The court upheld the sufficiency
of FERC’s environmental justice review, finding the EIS
indicated that 83.7% of the proposed route would cross through or
near environmental justice communities, and that FERC evaluated
various alternatives, identified relevant environmental justice
communities, and adequately considered cumulative impacts.
The court further noted that FERC took commenters’ concerns
on this issue seriously, reopening the comment period for the EIS
to seek additional input and eventually securing agreement from the
applicant to relocate a portion of the project to mitigate effects
on environmental justice communities.

Greenhouse Gas Emissions

Next, Sierra Club argued, and the court agreed, that the EIS
inadequately considered the indirect effects of downstream
greenhouse gas emissions. According to the court, it is
“reasonably foreseeable” that the gas transported via
the project will be burned in power plants, and that the burning
natural gas will in turn release greenhouse gases that will affect
climate change. NEPA obligates an agency to consider effects
that are “reasonably foreseeable,” but this obligation
does not apply where the agency is not the “legally relevant
cause” of such effects.

Here, the court’s analysis turned on its interpretation of
the Supreme Court’s decision in Department of
Transportation v. Public Citizen.4Public
Citizen held that NEPA does not require an agency to evaluate
the environmental impacts where that agency does not have the
authority to prevent the cause of injury. In last
year’s LNG decisions, the D.C. Circuit relied on Public
Citizen in deciding that FERC is not the “legally
relevant cause” of any indirect effects of increased natural
gas exports—and consequently is not required to consider such
effects in its NEPA review—because the Department of Energy
(“DOE”) is the agency with authority to approve natural
gas exports.5 The August 22 decision
distinguished the LNG cases, and the scope of FERC’s
environmental review thereunder, from FERC’s NEPA obligations
in this case. In the court’s words:

Our holding in the LNG cases was not
based solely on the fact that a second agency’s approval was
necessary before the environmental effect at issue could
occur. Rather [the cases] rested on the premise that FERC had
no legal authority to prevent the adverse environmental
effects of natural gas exports. . . . The holding in
[the LNG cases] turned, not on the question “What activities
does FERC regulate?” but instead on the question “What
factors can FERC consider when regulating in its proper
sphere?”6

Thus the court contrasted the limited scope of what FERC may
consider under DOE’s “narrow delegation” of
authority versus FERC’s broader statutory authority
to determine whether applications to construct and operate
pipelines are in the public convenience and necessity under NGA
section 7. In the LNG context, the court maintained,
FERC was not statutorily authorized to evaluate the effects of
natural gas exports when considering an application to construct
and operate a facility. On the other hand, the court
continued, FERC does have the authority to deny a pipeline
certificate based on its potential environmental harm under NGA
section 7; therefore FERC is the “legally relevant
cause” of the direct and indirect environmental effects of
approved pipelines, such as downstream greenhouse gas
emissions. Accordingly, the court found FERC was required to
analyze the indirect and cumulative effects of greenhouse gas
emissions in the EIS.

Next, the court addressed FERC’s assertion that it is
impossible to know the exact quantity of greenhouse gases that
would result from the project’s approval. Because NEPA
requires agencies to engage in “reasonable
forecasting,” the court concluded that FERC should have
either provided a quantitative estimate of downstream greenhouse
gas emissions in the EIS or given a specific explanation as to why
it could not do so. According to the court, such an estimate
or explanation is required notwithstanding that greenhouse gas
emissions may be somewhat offset due to the pipeline project itself
(e.g., due to the retirement of coal-fired plants), and
notwithstanding that the emitting power plants are subject to state
and federal air permitting processes.

Landowner NEPA Challenges

The Landowner petitioners attacked two aspects of the EIS.
First, they argued that FERC erroneously limited the scope of its
evaluation of alternatives. The court upheld FERC’s
evaluation of alternatives, noting that FERC considered twelve
major route alternatives (including a no-action alternative).
The court also noted that the Landowners failed to provide
arguments to support their claim or give examples of alternatives
FERC failed to consider. Second, the Landowners assert that
FERC inadequately considered safety risks with respect to the
pipeline’s construction. The court disagreed, finding
FERC took the requisite “hard look” by evaluating the
risk of pipeline crossings and responding to commenters’
safety concerns in its EIS.

Non-Environmental Arguments

Landowners also challenged FERC’s evaluation of a need for
the project under its NGA section 7 review, arguing that the
project merely serves the profit motives of the applicants and
fails to satisfy a public need. Pointing out that petitioners
misconstrued the relevant standard that the project meet a
“market need,” the court found that the
requirement had been met by a showing that 93% of the
project’s capacity has been subscribed.

Finally, Landowners argued that FERC violated the Sunshine Act
by issuing the Certificate Order by notational vote rather than in
a public meeting. The court disagreed, noting the Sunshine
Act does not require agencies to conduct business via meetings, but
rather requires that if such meetings are held that they be open to
the public.

Judge Brown’s Partial Dissent

Judge Brown concurred in part and dissented in part, agreeing
with the decision in all respects except for the court’s
findings related to greenhouse gas emissions and its vacatur and
remand of the Certificate Order. Judge Brown disagreed with
the court’s analysis of Public Citizen, arguing that
“when the occurrence of an indirect environmental effect is
contingent upon the issuance of a license from a separate agency,
the agency under review is not required to address those indirect
effects in its NEPA analysis.”7 Judge Brown found
the issues in the instant case “virtually identical” to
those in the LNG decisions: Just as FERC cannot control the effects
of increased exports because exports are approved by DOE, FERC
cannot control the effects of greenhouse gases emitted by power
plants because the construction and operation of power plants are
regulated by state authorities. According to Judge Brown,
this “breaks the chain of causation,” such that FERC is
not required to consider greenhouse gas emissions caused by power
plants in its NEPA review. In response to the court’s
distinction between the statutory authority afforded FERC under NGA
section 3 versus NGA section 7, Judge Brown noted that
“nothing in the text of either statute empowers the
Commission to entirely deny the construction of an export terminal
or the issuance of a certificate based solely on an adverse
indirect environmental effect regulated by another
agency.”8 Moreover, she noted, even if FERC
did have the authority to deny a project based on such concerns,
its denial would prevent neither the state’s ability to
approve construction or expansion of the relevant power plants nor
the attendant downstream greenhouse gas emissions

In the absence of rehearing en banc, FERC will need to
address the issues identified by the panel majority on
remand. As the D.C. Circuit has held, NEPA does not mandate
particular results; NEPA prescribes a necessary process.
Nothing in the majority opinion prevents FERC on remand from
determining that the proposed projects remain in the public
interest, once the additional elements identified by the majority
are identified and addressed.

5
Under section 3 of the NGA, DOE has the authority to approve
exports of natural gas, including LNG. Under delegated
authority from the DOE, FERC authorizes the construction, siting,
and operation of LNG facilities.

Aging or absent sewers and other failing infrastructure, including pipes that carry wastewater to treatment plants, are contributing to water quality problems around the country, including across New York state.

In a remarkable development around the contentious Dakota Access Pipeline (DAPL), the developer of the project, Energy Transfer Equity and Energy Transfer Partners, sued the environmental groups that opposed DAPL.

On August 28, 2017, the Environmental Protection Agency (EPA) and the U.S. Department of the Army (Army) published a Federal Register notice announcing that the agencies will hold ten teleconferences...

In the second instalment of Brattle's Retail Energy Practice Briefing Series, Brattle economists examine how "Utility of the Future" (UoF) developments could affect the measurement and compensation of business...

This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).

Email Address

Company Name

Password

Confirm Password

Position

Mondaq Topics -- Select your Interests

Accounting

Anti-trust

Commercial

Compliance

Consumer

Criminal

Employment

Energy

Environment

Family

Finance

Government

Healthcare

Immigration

Insolvency

Insurance

International

IP

Law Performance

Law Practice

Litigation

Media & IT

Privacy

Real Estate

Strategy

Tax

Technology

Transport

Wealth Mgt

Regions

Africa

Asia

Asia Pacific

Australasia

Canada

Caribbean

Europe

European Union

Latin America

Middle East

U.K.

United States

Worldwide Updates

Check to state you have read and agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you
are granted a non-exclusive, revocable license to access the Website under its
terms and conditions of use. Your use of the Website constitutes your agreement
to the following terms and conditions of use. Mondaq Ltd may terminate your use
of the Website if you are in breach of these terms and conditions or if Mondaq
Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to
read the full text of the content and articles available (the Content). You may
not modify, publish, transmit, transfer or sell, reproduce, create derivative
works from, distribute, perform, link, display, or in any way exploit any of the
Content, in whole or in part, except as expressly permitted in these terms &
conditions or with the prior written consent of Mondaq Ltd. You may not use
electronic or other means to extract details or information about Mondaq.com’s
content, users or contributors in order to offer them any services or products
which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the
suitability of the information contained in the documents and related graphics
published on this server for any purpose. All such documents and related
graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or
its respective suppliers hereby disclaim all warranties and conditions with
regard to this information, including all implied warranties and conditions of
merchantability, fitness for a particular purpose, title and non-infringement.
In no event shall Mondaq Ltd and/or its respective suppliers be liable for any
special, indirect or consequential damages or any damages whatsoever resulting
from loss of use, data or profits, whether in an action of contract, negligence
or other tortious action, arising out of or in connection with the use or
performance of information available from this server.

The documents and related graphics published on this server could include
technical inaccuracies or typographical errors. Changes are periodically added
to the information herein. Mondaq Ltd and/or its respective suppliers may make
improvements and/or changes in the product(s) and/or the program(s) described
herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally
identifies you, including what sort of information you are interested in, for
three primary purposes:

To allow you to personalize the Mondaq websites you are visiting.

To enable features such as password reminder, newsletter alerts, email a
colleague, and linking from Mondaq (and its affiliate sites) to your website.

Mondaq (and its affiliate sites) do not sell or provide your details to third
parties other than information providers. The reason we provide our information
providers with this information is so that they can measure the response their
articles are receiving and provide you with information about their products and
services.

If you do not want us to provide your name and email address you may opt out
by clicking here .

If you do not wish to receive any future announcements of products and
services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to
view the free information on the site. We also collect information from our
users at several different points on the websites: this is so that we can
customise the sites according to individual usage, provide 'session-aware'
functionality, and ensure that content is acquired and developed appropriately.
This gives us an overall picture of our user profiles, which in turn shows to
our Editorial Contributors the type of person they are reaching by posting
articles on Mondaq (and its affiliate sites) – meaning more free content for
registered users.

We are only able to provide the material on the Mondaq (and its affiliate
sites) site free to site visitors because we can pass on information about the
pages that users are viewing and the personal information users provide to us
(e.g. email addresses) to reputable contributing firms such as law firms who
author those pages. We do not sell or rent information to anyone else other than
the authors of those pages, who may change from time to time. Should you wish us
not to disclose your details to any of these parties, please tick the box above
or tick the box marked "Opt out of Registration Information Disclosure" on the
Your Profile page. We and our author organisations may only contact you via
email or other means if you allow us to do so. Users can opt out of contact when
they register on the site, or send an email to unsubscribe@mondaq.com with “no
disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate
registration form. This is a personalised service where users choose regions and
topics of interest and we send it only to those users who have requested it.
Users can stop receiving these Alerts by going to the Mondaq News Alerts page
and deselecting all interest areas. In the same way users can amend their
personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an
identifying user number. The cookies do not contain any personal information
about users. We use the cookie so users do not have to log in every time they
use the service and the cookie will automatically expire if you do not visit the
Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to
personalise a user's experience of the site (for example to show information
specific to a user's region). As the Mondaq sites are fully personalised and
cookies are essential to its core technology the site will function
unpredictably with browsers that do not support cookies - or where cookies are
disabled (in these circumstances we advise you to attempt to locate the
information you require elsewhere on the web). However if you are concerned
about the presence of a Mondaq cookie on your machine you can also choose to
expire the cookie immediately (remove it) by selecting the 'Log Off' menu option
as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example,
advertisers). However, we have no access to or control over these cookies and we
are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement,
and gather broad demographic information for aggregate use. IP addresses are not
linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or
its affiliate sites) are not responsible for the privacy practices of such other
sites. We encourage our users to be aware when they leave our site and to read
the privacy statements of these third party sites. This privacy statement
applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or
contests. Participation in these surveys or contests is completely voluntary and
the user therefore has a choice whether or not to disclose any information
requested. Information requested may include contact information (such as name
and delivery address), and demographic information (such as postcode, age
level). Contact information will be used to notify the winners and award prizes.
Survey information will be used for purposes of monitoring or improving the
functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our
site, we ask them for the friend’s name and email address. Mondaq stores this
information and may contact the friend to invite them to register with Mondaq,
but they will not be contacted more than once. The friend may contact Mondaq to
request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’
information. When users submit sensitive information via the website, your
information is protected using firewalls and other security technology. If you
have any questions about the security at our website, you can send an email to
webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode),
or if a user no longer desires our service, we will endeavour to provide a way
to correct, update or remove that user’s personal data provided to us. This can
usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will
post those changes on our site so our users are always aware of what information
we collect, how we use it, and under what circumstances, if any, we disclose it.
If at any point we decide to use personally identifiable information in a manner
different from that stated at the time it was collected, we will notify users by
way of an email. Users will have a choice as to whether or not we use their
information in this different manner. We will use information in accordance with
the privacy policy under which the information was collected.

How to contact Mondaq

If for some reason you believe Mondaq Ltd. has not adhered to these
principles, please notify us by e-mail at problems@mondaq.com and we will use
commercially reasonable efforts to determine and correct the problem promptly.